MARKET investors have a lesson to learn from the way Manila Electric Co. (Meralco) has suffered as a result of the relentless attack made by Winston Garcia—president, general manager and vice chairman of the board of trustees of the Government Service Insurance System (GSIS)—against the company and the Lopezes, who control its board and management. That lesson is: at the first sign of trouble, sell. Or In this case, at Garcia’s initial salvo, sell?

What is happening to Meralco, whose stock has suffered the harshest beating so far since it sold shares to the public in 1992, is bound to happen to other listed companies, from activist stockholders, although not necessarily from Garcia. It is not financials that ail Meralco, which reported a consolidated net profit P728 million in the first six months and P16.665 billion in retained earnings. It’s the threat of the government takeover coming from a pension fund whose seed money comes from 1.4 million government workers. And what triggered the threat is the law that allows a public utility firm like Meralco to pass on to consumers what should have been avoided through efficiency. In the case of a power distributor, it is called systems loss.

Investors may want to look at what happened to GSIS’s investments. At a high of P82.50 on April 21, its 249.139 billion shares in Meralco had market value of P20.554 billion, which fell on Friday to P15.945 billion for a staggering 22.424-percent paper loss of P4.609 billion  

Like GSIS, the Social Security System (SSS) failed to avoid losses as a result of Meralco’s sudden plunge by not selling at the first sign of trouble. It would be safe to say that SSS chief Corazon de la Paz did not call up her counterpart at GSIS and asked him his agenda before he talked to the media. At P82.50, SSS’s 61.529 million Meralco shares had a market value of P5.076 billion, which drastically dropped to P3.937 billion, causing its over 24 million member-workers from the private sector some P1.138 billion in paper losses.

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Including the stakes of other agencies in Meralco, the government holds a total of 362.853 million shares. In addition to GSIS and SSS, the shares are owned by Land Bank of the Philippines with 48.569 million shares; Home Mutual Development Fund, 1.712 million shares; and Philippine Health Insurance Corp., 1.712 million shares.

Computed at P82.50 each, the government-held 362.853-million shares had a market value of P29.935 billion, which dropped to P23.223 billion for a huge paper loss of P6.712 billion.

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In exposing Meralco’s alleged sins against the consumers, has Garcia shown himself to be a market mover? Imagine, it took only one government official appointed by President Arroyo to pull down Meralco from a high of P82.50 to a low of P64 on Friday! He rattled the market, forcing even foreign funds to dump their shares in the electricity utility.

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Of course, what Garcia did to Meralco in his bid to dislodge the Lopez management he would not dare do with San Miguel Corp. (SMC) and Eduardo Cojuangco Jr., SMC’s chairman and chief executive officer. Allies don’t quarrel over the composition of the board. In the first place, Garcia-led GSIS sold its SMC shares to San Miguel Corp. Retirement Fund. The sale drastically reduced GSIS’s holdings in SMC to 1.674 million A shares, as of March 31, 2008. This, from the 195.702 million A shares and 3.647 million B shares held by GSIS in March 2007. 

Is there a tie that binds GSIS with SMC. Or is it Garcia, and not GSIS, who has built a strong tie or link with SMC?

It may be important to note that one of SMC’s subsidiaries is GSIS’s costockholder in a property company, which will be capitalized at P600 million. GSIS invested the property, while the SMC unit is providing the cash infusion of P300 million.

San Miguel Properties Inc. (SMPI) and GSIS “agreed to establish a joint-venture corporation” in October 31, 2007. However, GSIS won’t be in the company as a 50-percent stockholder for the long-term. Under the deal, San Miguel Properties “grants GSIS the option to sell to [SMPI] all shares of stock of the [joint-venture contract] issued in the name of GSIS and its nominees under certain terms and conditions.”

LISTED First Philippine Holdings Corp. (FPHC) admitted to have considered listing its shares at the New York Stock Exchange (NYSE) but present conditions forced the company to rethink its plan.

Sun now covers 6M users, says 3G service is ‘better’

DIGITEL Mobile Philippines Inc.’s (DMPI) wireless brand, Sun Cellular, has already signed up six million subscribers and vowed to add four million more in the remaining months of the year.

Filipino businesses and advertisers can now promote their products through the Yahoo! search engine.

THE dust is not expected to settle down even after the issue of whoever gains or retains control of the management of the Manila Electric Co. (Meralco) is resolved today at its annual stockholders meeting.

DAVAO CITY—The mango production venture formed by a former mango contractor that hit a gold find in chemical distribution and a Middle East-financed buyer based in Cagayan de Oro City is now reaping the success of this union.

MARKET investors have a lesson to learn from the way Manila Electric Co. (Meralco) has suffered as a result of the relentless attack made by Winston Garcia—president, general manager and vice chairman of the board of trustees of the Government Service Insurance System (GSIS)—against the company and the Lopezes, who control its board and management. That lesson is: at the first sign of trouble, sell. Or In this case, at Garcia’s initial salvo, sell?